Thoughts about risk, insurance, terrorism, disasters, public policy, and other things that interest me

Wednesday, April 6, 2011

Wolf on Managing a Nonprofit Organization

Thomas Wolf's book, Managing a Nonprofit Organization in the Twenty-first Century (Third Edition, Simon and Schuster, 1999), is an encyclopedic primer on nonprofit management that explains how to deal with organizational growth and change and that describes the challenges of working with volunteers, staff, and trustees. This book also deals with the emergence of profit-oriented ventures, changes in accounting rules, customer-orientation, and the role of leadership in nonprofit management. From the point of view of the nonprofit practictioner, perhaps the most useful aspect of this book is its very helpful checklists at the end of each chapter.

The author wrote this book because (1) he was concerned about the sustainability of nonprofits, (2) he wanted to articulate the difference between the nonprofit and for profit sectors, and (3) he wanted to address issues related to nonprofit leadership development and maintenance.

Wolf starts by describing what nonprofts are. This includes:

A collection of over 1 million organizations in the U.S.

Organizationsa that range from small-budget grassroots organizations to universities with endowments in the billions of dollars

Five percent of all U.S, institutions and two percent of all U.S. assets

Ultimately, however, he concludes that there is no easy answer to "What is a nonprofit?" since this question has many forms of an answer. Managing a nonprofit is more nebulous than the profit sector since the purpose is public service, measuring success or failure is challenging, and a nonprofit has no owner.

The defining characteristics of nonprofits include:

They are established to provide a public service (with a few exceptions, e.g., clubs, unions, condo associations). They may provide services that are also provided by private sector (e.g., education, health services)—although they have no mandate of equity

Their governance must preclude self-interest and private gain

They are exempt from taxation

Gifts to them are tax deductible

Wolf describes the challenges facing nonprofits as:

Articulating a mission

Engaging in risk/survival analysis

Identifying/involving a constituency

Testing for "organized abandonment" (i.e., at what point, if any, has the mission been accomplished and/or is the nonprofit no longer relevant?) This point, in particular, is interesting because it seems more theoretical than real since, in actuality, most nonprofits would simply adjust their missions rather than close (assuming they still have funds and/or funding sources).

Wolf believes that being a nonprofit board member is an honor…but more than an honor—a responsibility with legal obligations It requires knowledge, commitment, and time. Board members must determine mission, set programs, establish fiscal policies, provide resources, and appoint, select, and terminate the executive director/CEO. Board members, in general, do not engage in the day-to-day operations, hire staff (other than CEO), or make detailed programmatic decisions (without staff consultation).

Wolf also recognizes that, while the board is essential for organizing the nonprofit, it cannot effectively fulfill its job without information, help, and support from its executive director. It is essential for the executive director to have a good relationship with the board by supporting their operations and administration. The following are responsibilities that the executive director has to the board: